GM Recalls; Primary Battles; First Polls to Close; When Did the White House Know?

Aired May 20, 2014 - 16:00 ET

THIS IS A RUSH TRANSCRIPT. THIS COPY MAY NOT BE IN ITS FINAL FORM AND MAY BE UPDATED.

JAKE TAPPER, CNN HOST: So, who do you think is having a worse month, Donald Sterling or General Motors?

I'm Jake Tapper. This is THE LEAD.

The money lead. GM's second round of recalls on top of a $35 million fine for delaying yet another recall all in the span of a week. How much does all of this make you want to buy a GM car?

The politics lead. The battle for control of Congress may be in November, but the battle for control of the GOP is today. Key primary elections in six states will set the stage for the midterms, many of them pitting the Tea Party against the Republican establishment. Which side will walk away the victor?

And the world lead. Did the CIA have a hand in the frightening outbreak of polio in Pakistan this year? Now, before you dismiss that as conspiracy talk, remember, the agency used a vaccination ploy as part of its strategy to locate Osama bin Laden -- the White House now trying to get the world to trust what is in vaccines again.

Good afternoon, everyone. Welcome to THE LEAD. I'm Jake Tapper.

We will begin with the money lead, the closing bell just seconds ago on Wall Street. There are days when that bell can feel like jackpot on a slot machine. And then there are days when it can feel like somebody pulled the fire alarm. And this, regrettably, is one of those alarm days, the Dow dropping about 170 points at one point, then ticking back up before trading ended, but still closing with a triple- digit loss.

Let's get right out to our Alison Kosik standing by at the New York Stock Exchange.

Alison, what happened there today?

ALISON KOSIK, CNN BUSINESS CORRESPONDENT: Jake, it was all about words.

Words wound up spooking the market today, especially when those words are coming from presidents of the Federal Reserve, the group which actually sets interest rates, so, we saw most of the Dow 30 end in the red, after a couple of them gave speeches today saying the Fed could consider raising interest rates earlier than expected. Now, loan rates, they were expected to stick around until next year. And if -- once higher rates go into effect, it could keep Americans from buying homes and cars or taking out loans. And Wall Street is not so sure at this point that the economy is ready for that. So what we saw happen today was investors hitting the sell button.

Also rattling investors today, some lousy quarterly earnings from big stores like Staples, Dick's Sporting Goods, and Urban Outfitters. We saw shares of retailers plunge down by the double digits. Why such a strong response? It's a reminder that the economic recovery is slow and Americans are not spending as much. And retailers at this point, Jake, they can't blame the brutally cold temps any more.

Investors were hoping consumers would bounce back. We're just not seeing that at this point -- Jake.

TAPPER: Some bad news.

Alison Kosik at the New York Stock Exchange, thanks so much.

Now, I don't know who to feel worse for, the people who own General Motors stock, which is down 19 percent, or the people who actually own General Motors vehicles, because today the nation's largest automotive company announced its second round of recalls in the span of just five days, GM today recalling 2.4 million vehicles to fix four different safety flaws.

That's in addition, in addition to the 2.7 million it had recalled on Thursday. Now, in between that recall and this one, the government fined GM $35 million on Friday for waiting to issue yet another recall on an ignition switch problem, the one that the company first learned about a decade ago that has been linked to at least 13 deaths.

Now, let's bring in CNN correspondent Poppy Harlow in New York.

Poppy, it's getting hard to keep up with all of this hard news for GM. What models were recalled today?

POPPY HARLOW, CNN CORRESPONDENT: Yes, we have been talking about it a lot on your show, certainly.

Jake, 1.3 million are pretty popular late-model crossovers, the Buick Enclave, Chevy Traverse, GMC Acadia, model years 2009 to 2014, also Saturn Outlook from 2009 to 2010. This is a seat belt issue. It can separate from the car during a crash. This is serious.

GM is telling people, dealers not to sell new or used ones until they are repaired. Also, on the other end, 1.1 million older Chevy Malibus, also Pontiac G6s. The transmission shift cable can fracture. GM says about 18 crashes are tied to this.

Finally, on the smaller end, you have got a recall on the Cadillac Escalade, Chevy Silverado, GMC Sierra, some of them for air bag and fire risks. Important to note here, Jake, GM is saying there are no fatalities associated with any of these cars that are being recalled.

TAPPER: Well, that's good news, I suppose.

HARLOW: Right.

TAPPER: But, Poppy, more broadly, what is going on with GM?

HARLOW: That is the big, huge, great question. They have recalled 13.6 million cars this year alone, and it's only May.

They have more than doubled the number of product investigators they have this year. This is, Jake, a company that is trying to learn from their past errors, get out in front. Remember, at this hour, GM is still in the middle of a criminal probe by the Department of Justice as to what you mentioned in the intro, why they waited a decade to report that ignition switch defect tied to at least 13 deaths.

That led to the big recall and a $35 million fine from the government on Friday. That is likely going to cost GM a lot more in victim compensation, also in other possible fines. But when you look at the big costs here, these two recalls in less than five days will cost General Motors $400 million this quarter on top of $1.3 billion for the ignition switch recall in the first quarter.

What is really interesting, Jake, you were talking about people, do they still want to buy GM cars? They are. This hasn't hurt their sales at all. Latest numbers in April show us they were up 7 percent from a year ago. But I do also want to tell you, what we heard from General Motors today is these recalls are not over. They said they are going to issue more recalls soon.

Two more recalls are coming from General Motors. We don't know how big they will be or what models, but we can expect to find out about that pretty soon.

TAPPER: Two more recalls coming down the pipe, good lord.

HARLOW: Two more.

TAPPER: Good lord.

Poppy Harlow, thank you so much.

Turning to the politics lead now, it's Super Tuesday, or at least the midterm equivalent, which maybe we can call pretty good Tuesday, key primary elections happening from coast to coast today. Even if you're not in one of the six states where voting is happening right now, these races could have serious implications on who will control your government.

In a moment, we will get to the race involving a Clinton in-law and another involving allegations of stalking.

But, first, we want to focus on the most closely watched race, the one in Kentucky in which the top Republican in the Senate is fighting for his political life with a challenger who says he's just not conservative enough.

Mitch McConnell himself, Jake, you know this, since 2010, when the Tea Party exploded, he watched some of his Senate Republican colleagues, some of the candidates he supported get toppled by challenges from the right. He -- and those candidates went on to in some cases to lose to Democrats.

McConnell blames all of that on him not being majority leader now, Republicans not having the Senate. And he's determined not to let that happen to him.

SEN. MITCH MCCONNELL (R-KY), MINORITY LEADER: You can change the United States Senate, make me the offensive coordinator, instead of the defensive coordinator.

(CHEERING AND APPLAUSE)

MCCONNELL: Yes. Thank you.

BASH: Translation: Reelect him, and chances are good that Republicans take control of the Senate and he will be in charge of sacking the Obama agenda.

MCCONNELL: Anybody who replaces me, chances are, will never be in that position, ever.

BASH: Running on, not from his 30 years in the Senate is an interesting play for a politician getting slammed by opponents on the right and left for being too entrenched in Washington.

MATT BEVIN (R), KENTUCKY SENATORIAL CANDIDATE: Thank you all for being here.

BASH: But McConnell defused the GOP primary threat from conservative challenge Matt Bevin by confronting it early with millions of dollars and support from his junior senator, Rand Paul, a Tea Party darling.

BASH: Polls show Grimes neck and neck with McConnell. She's running on a classic challenger theme: change. GRIMES: We have had 30 years of failed leadership of Mitch McConnell. We cannot afford six more.

BASH (on camera): Mitch McConnell has made it clear that he's not So much running against you, that his Democratic candidate is almost besides the point. He's running against the idea of a Democratic- controlled Senate.

GRIMES: Well, this election, no matter who Mitch McConnell thinks he's running against, it's going to be about what has occurred on his watch.

MCCONNELL: I think what Kentuckians have to decide is which direction they want the country to take. Do we want to go in a different direction or do we want Harry Reid to continue to be the majority leader? Do we want to vote for Barack Obama in a state that he carried four out of 120 counties?

BASH (voice-over): The president is unpopular in Kentucky, but polls show so is McConnell, especially with women. He's trying to soften his image with positive television ads.

UNIDENTIFIED FEMALE: Because Mitch loves Kentucky. We love Kentucky.

BASH: And campaigning with his wife, former Bush Cabinet Secretary Elaine Chao.

But mostly McConnell comes back to the unconventional theme in Tea Party times: Seniority and Washington influence is a good thing.

(on camera): There are people out there who might like that idea, might like the idea of a change.

MCCONNELL: I don't think Kentuckians want to lose the kind of influence that has taken years to gain.

(END VIDEOTAPE)

BASH: Now, there is drama in today's primary here, Jake, and that is how much support among Republicans Mitch McConnell will lose.

If it is significant and a fair number of those Republicans don't come back and vote for him in the fall, that is going to make it a lot harder for him to beat his Democratic opponent in November.

TAPPER: All right, Dana Bash, thanks. We will see you later in the hour. Stick around.

Coming up: She's a Republican favorite in a blue state, but could new accusations about stalking and harassing about two different exes cost her the election?

And, later, it's one of the most recognizable songs of all time, but now another band is saying that part of "Stairway to Heaven" was stolen from them. Stick around. We will play the other song. Then you can decide for yourself.

(COMMERCIAL BREAK)

TAPPER: Welcome back to THE LEAD.

Continuing our politics lead, the first polls in Kentucky close in fewer than two hours. Six states today are holding primaries. Many of the races have Tea Party candidates, but not many that are expected to win their races.

House Speaker John Boehner says, don't worry; Tea Partiers are just like us.

(BEGIN VIDEO CLIP)

REP. JOHN BOEHNER (R-OH), SPEAKER OF THE HOUSE: There's not that much -- there's not big a -- that big a difference between what you all call the Tea Party and your average conservative Republican, you know? We're against Obamacare. We think taxes are too high. We think the government is too big. So, I wouldn't continue to sing that same song.

(END VIDEO CLIP)

TAPPER: Back in February, I covered the Tea Party's fifth birthday party. No, I didn't pin the tail on the donkey. But I did speak to Congressman Steve King of Iowa who told me even if there is not a repeat this year of 2010, Tea Party rise in Congress, the movement is still winning.

(BEGIN VIDEO CLIP)

REP. STEVE KING (R), IOWA: When the Republicans shift their vote to the right so that they at least can avoid their primary challenging, you see the political center of Congress move to the right.

(END VIDEO CLIP)

TAPPER: Is Congressman King right? Is it now more about moving the party than winning races?

Let's bring in our panel.

Gloria Borger is CNN chief political analyst. Mark Preston is CNN's political director. And chief congressional correspondent Dana Bash joins us again from Louisville where she's covering the Kentucky primary.

Gloria, let me start with you. Is John Boehner right there?

GLORIA BORGER, CNN CHIEF POLITICAL ANALYST: Yes.

TAPPER: You think it is the Tea Partiers and conservatives are not that far apart anymore. BORGER: Remember the Reagan big tent? Well, I think the tent is getting bigger and everybody is now one big conservative.

What the establishment has done -- and I would consider John Boehner a part of that political establishment and the Republican Party is they have done two things. First of all, they have gone out of their way to disqualify all those Tea Party candidates they don't think can win because they don't want a repeat of 2010 and 2012 where they think they lost about six Senate seats because of purity, right?

TAPPER: Right.

BORGER: And, secondly, they have adopted much of the Tea Party platform. What reunites them now is their opposition to Obamacare. Some Republicans opposed to climate change, opposed to immigration reform, want entitlement reform. So, what Boehner and Steve King are saying is absolutely true. The party has shifted to the right and for now at least, because they want to win control of the Senate, they are one big happy family.

TAPPER: Mark, let's talk about what's going on in Georgia today. We all knew who the Democratic nominee for the Senate there is going to be. It's really a race between the Republicans. There are seven candidates to replace Saxby Chambliss who is retiring. One of them is Karen Handel. She's a Tea Party candidate endorsed by Sarah Palin. There's probably going to be a runoff between the top two vote getters here.

What do we think is going to happen? Is the Tea Party going to win? Or is the establishment going to win tonight?

MARK PRESTON, CNN POLITICAL DIRECTOR: Well, Karen Handel is an interesting candidate because she's a Tea Party candidate by the fact that Sarah Palin has endorsed her but is she a Tea Party candidate? What is a true definition of a Tea Party candidate?

What's interesting for her is that differentiates her from everyone else is that she's the only woman in the Republican primary right now. And just about every one of them else are really establishment candidates. They're sitting congressmen except for Paul Broun, who is I guess, the true definition of the Tea Party candidate.

A week ago, if you were to talk to people who knew the race, followed the race, they would have thought that Karen Handel would come in third. Today, just an hour ago, they're saying she could come in second, make a runoff, a lot of money from Tea Party groups could end up in Georgia.

BORGER: You know, you could wind up in this race with two establishment candidates challenging each other, or Tea Party versus establishment. So, you know, there's going to be a primary -- a run off, one way or another.

PRESTON: It's a Republican civil war basically what we're seeing in Georgia.

TAPPER: Dana, go ahead.

DANA BASH, CNN CHIEF CONGRESSIONAL CORRESPONDENT: Well, I was going to say, or you could end up with a Democratic senator, Michelle Nunn --

BORGER: Right.

BASH: -- taking the seat because of all of the fighting that you all are talking about and that is certainly the state that Democrats have their eye on to try to beat back the Republican -- what we expect to be Republican gains that could lead them to get the majority, that is the state and they're hoping that this fighting amongst Republicans helps.

TAPPER: And Democrats are hoping that one of the more fringe candidates is victorious.

BORGER: Sure. Right.

TAPPER: Let's turn to Oregon where Monica Wehby, a pediatric neurosurgeon, who was considered the front-runner in the Senate Republican primary there. But in the last few days, reports have come out to local media where a boyfriend accused her of stalking him and there are police reports from 2007 and 2009, incidents with her now ex-husband. Her campaign issued a statement saying that this was the real war on women put out by Democrats on her, leaking information -- Mark.

PRESTON: In "The Oregonian", the newspaper out there, actually has documentation that it was Democrats that were the first to get the police records. So, at the time -- certainly with "The New York Times" and them fighting their executive editor, and this whole idea about the war on women, this is very dangerous territory for Democrats who are supposed to be taking care of women. That's their natural constituents.

BORGER: Well, what do you do when you don't want a woman to win a Senate seat? You portray her as some sort of emotional wreck, OK, who can't possibly be trusted with the high office.

So, this is what all of this does. It portrays her as somebody who can't be trusted and while it might not hurt her as much in the primary, it would certainly come back in a general election.

TAPPER: But, Dana, let me play devil's advocate for a second here. If there were police reports about a male candidate, they would come out, too, right?

BASH: You took the words out of my mouth. I was going to say that any time you have a situation like, my test of it is to say, what if it were a male candidate?

And this case, yes, there probably would be a police report that would come out eventually if it were that bad, but then you have to go back to the question of, would it matter as much? I mean, would people go as crazy over a male candidate who had alleged issues in their own home with the girlfriend or ex-husband, or would people shrug their shoulders and say that's just the way it is?

TAPPER: We should point --

BASH: We don't know the answer to that but --

TAPPER: We should point out that the ex-boyfriend is a big supporter of Dr. Wehby.

BASH: Exactly.

BORGER: Right.

TAPPER: And the ex-husband, apparently, she and her ex-husband are perfectly fine now.

BORGER: And don't forget, this is a mail-in primary so all of this may not affect anything because people may have already mailed in their ballots. But again, it's just a disqualifier. The irony to me, of course, is -- if it is the Democrats who are doing these leaking --

PRESTON: But, Jake --

BORGER: Defending a woman.

PRESTON: Right. And you know what this is coming down to is we saw Democrats do this back in 2010, Harry Reid, immediately when his challenger Sharron Angle, a woman, won the primary, they spent about $2 million and they crushed her early in the summer. She was never able to recover and that's what you're seeing with Democrats right now. They are trying to crush Monica Wehby right now.

BORGER: They want to win.

TAPPER: Dana?

BASH: Jake, if I may, the reason why they tried to crush her, and Mark is absolutely right, is because she seems so viable. This candidate we're talking about is a pediatrician, she is a -- never been a politician before and she's somebody who Republicans are so keen on that Mitch McConnell, here in Kentucky when he's got his own war going on, he made the point of bringing up her name in his own speech.

So, that's how much they are relying on her to expand the math when it comes to how many Democratic seats Republicans can take because Oregon really wasn't there in the initial run at this.

TAPPER: Let's turn to Pennsylvania, if we could. We should mention that a federal judge has ruled in the Commonwealth of Pennsylvania that the same-sex marriage ban -- the ban on same-sex marriage is unconstitutional. So, that happened there today.

But this one district, the 13th of Pennsylvania, where Chelsea Clinton's mother-in-law, Marjorie Margolies, is running for a House seat against other Democrats. I should disclose, that 20 years ago, I worked for Marjorie. She's had some celebrity help from her fellow in-law Bill Clinton. He just did a robocall. Let's play part of that.

(BEGIN AUDIO CLIP)

WILLIAM J. CLINTON, FORMER PRESIDENT: Hello, this is Bill Clinton. I'm calling to ask you to vote for Marjorie Margolies for Congress. Twenty years ago, Marjorie cast the deciding vote on my economic plan. It reversed trickle-down economics and set out country on the longest peacetime expansion in history.

(END AUDIO CLIP)

TAPPER: Gloria, you went up to Pennsylvania.

BORGER: I did.

TAPPER: You interviewed Ms. Margolies. Does Clinton help her or hurt her?

BORGER: Help. Help, both Clintons. You know, a lot of people are complaining that Hillary Clinton is not doing more for other candidates. They both done fundraising for Marjorie Margolies, their daughter is married to her son. And he did the robocall as you point out and in the urban areas in her district, Philadelphia, it will certainly help her. It has helped her tremendously with fundraising.

TAPPER: Mark, she did not get the endorsement from "The Philadelphia Enquirer", which is an important endorsement of Democratic primaries in a place like Philadelphia.

PRESTON: No doubt. She was supposed to win this primary and they start slipping away. And one thing I found out just an hour ago, I didn't realize this, is that they put out three pieces of mail to constituents, or potential voters, that had -- saying it was anti- choice message against the person who is supposed to defeat her. On the flip side of that mail was Bill Clinton's endorsement, so put it all together. If she wins, as Gloria says, it's because of the Clintons.

TAPPER: That's all the time we have.

Dana Bash, Gloria Borger, Mark Preston, thank you so much.

CNN will be bringing you election results for all of these races. So stay with us all evening for the very latest.

Coming up, Michelle Obama gets angry and political. What she is saying to Republicans who want to delay her pet project.

Plus, it sure looks like military coup as the army takes to the streets in Bangkok, declaring martial law. Who is in control?

(COMMERCIAL BREAK)

TAPPER: Welcome back to THE LEAD. In national news, Monday, the White House claims that it had not learned about the situation at the Phoenix veterans affair hospital in which as many as 40 veterans died while waiting for delayed appointments until CNN first reported it. But what about that recently disclosed internal memo from the V.A. which warned of, quote, "inappropriate scheduling practices" way back in 2010? Who in the White House bothered to read that?

Let's bring in senior White House correspondent Jim Acosta at the White House.

Jim, the White House press secretary was asked about this memo today, from 2010. How did he respond?

JIM ACOSTA, CNN SENIOR WHITE HOUSE CORRESPONDENT: Well, it was very interesting, Jake, because yesterday, you know, we asked Jay Carney when the first president first heard about these allegations of concealing wait times at the V.A., at V.A. facilities, and referred us to the CNN report from three weeks ago. So, I wanted to go back to Jay Carney and I ask him about that because of this memo and we should point out that this was given to us by the American Legion.

It was written back on April 26th of 2010 by a deputy undersecretary. And it says right there in the very first page, "It has come to my attention that in order to improve scores on assorted access measures, certain facilities have adopted use of inappropriate scheduling practices, sometimes referred to as gaming strategies." And it goes on in the memo, to avoid or to advise many of these facilities to avoid these types of scheduling practices.